Custom Pie Menu B3D 2.72b
The invoke method of the operator is called which shows the menu. 

You might set the operator's context using UILayout.operator_context to EXEC_DEFAULT to directly call the operators execute method with the argument given:

pie.operator_context = 'EXEC_DEFAULT'
pie.operator("transform.select_orientation", text="Local").orientation='LOCAL'


You can also use the generic wm.context_set_enum operator to change the transform orientation:

op_props = pie.operator("wm.context_set_enum")
op_props.data_path = "space_data.transform_orientation"
op_props.value = 'LOCAL'